There are mixed messages from the government on the possibility of a windfall tax on oil and gas companies as the cost of living crisis continues to ravage the economy.
Speaking earlier on Thursday morning, Chancellor Rishi Sunak said that while he was “not naturally drawn” to the idea, “no option is on the table”.
Prime Minister Boris Johnson later said the government “should think about it”, before saying: “I don’t think (windfall taxes) are the right way to go”.
Then, at lunchtime, Mr Johnson’s official spokesman said that although ‘we’re just not taking options away’, the Prime Minister and Chancellor had said ‘we don’t think this is the right approach”.
This comes as energy companies continue to benefit from skyrocketing priceand UK households are grappling with record rises in energy bills, rising Council Tax and National Insurance payments, higher fuel prices and runaway inflation.
Among the reasons for the price hike is Russia’s war in Ukraine, which led to sanctions and supply constraints. There has also been an increase in demand for various things as the world emerges from the worst of the coronavirus pandemic.
The government has been called on to introduce a windfall tax on oil and gas companies to help fund the recovery – it’s a one-off tax on companies that have benefited from something they weren’t responsible for .
Mr Sunak said: “I’m not naturally drawn to the idea of windfall taxes in general. I find people split into two camps when it comes to windfall taxes.
“There’s a group of people who think you can never have a windfall tax, and there’s another group of people who think they’re a very simple answer to all problems. I’m not in any of these camps – I’m pragmatic about it.
“What I do know is that these companies are making very big profits right now because of the prices we’re seeing.
“What I want to see is a strong return of investment in the UK economy for jobs and energy security and I want to see that soon. If that doesn’t happen then, as I l I said, no options are on the table.”
Ministers to ‘review’ windfall tax
Earlier on Thursday, Prime Minister Boris Johnson suggested the government “should consider” the idea of a windfall tax.
“The downside of these kinds of taxes is that they discourage investment in the very things we need to see them put in,” Mr Johnson told LBC.
“They need to invest in new technology, in new energy supplies for the UK.”
Bernard Looney, chief executive of BP, recently said his company’s investment plans would not be affected by any windfall tax.
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When asked, the Prime Minister replied: “Well, we’ll have to think about it.
“What I’m saying is I want them to make these investments – they have to make these investments – in a new energy supply for our country.”
When pushed again about the possibility of a windfall tax, Mr Johnson said: “I don’t like them.
“I don’t think they are on the right track.
“I want these companies to make big, big investments.”
The Prime Minister’s official spokesman said on Thursday: “We are keeping options on the table and rightly so because we need them and it is the right approach given the kind of challenges we are seeing.
“But as the Prime Minister has said, and as the Chancellor has said, we don’t think that’s the right approach. We want those companies that are making a profit to make new investments, we’ve seen that before. a part.
“We are working with these businesses to encourage them to make new investments and we have seen multi-billion pound investments already made and we will continue to do so.
“But we’re just not removing options given the circumstances we’re facing.”